Employers will probably be allowed to make "tiered" contributions to HSAs based on factors such as age and income if they are in a cafeteria plan and design it properly, a top Treasury official said.

Speaking at a Washington conference, the official said reports of a HRA-HSA rollover were "premature" and "not likely."

At least two major HSA administrators are considering such an approach, and dozens more could follow as some custodial and administrators begin to examine the use of "rewards" programs to sell HSAs to larger groups.

The FSA carryover regs are coming in a week or two, not the HRA rollover. They will probably allow employers more flexibility in opting for the carryover grace period. But the fact that the White House endorsed the idea in principle was seen as significant.

The new HSA contributions would take advantage of the fact that cafeteria plans can, under a set of existing regs, vary the employer contribution to an HSA as long as it is not a de facto employer-only contribution (one official described this as "more than a 2:1 ratio").

For example, an employer HSA contribution could be a 1:1 match for employees in general, but raised to 2:1 or even 3:1 for certain sub-groups. These might include lower-income workers, those agreeing to take a health risk appraisal or use disease management, those with longer tenure, or even by age.

The contribution could also be deployed to migrate remaining balances in an HRA into the new HSA over a period of time. Some HRAs have already begun using this approach.

The Treasury official told CDMR and the IQPC audience that this would probably be allowable in some cases under the current FSA regs and HSA statute, but the model would have to prove in a test case that there was no discrimination. The official, who was offering a personal opinion only, said basing a "flex HSA" contribution on health status, for example, seemed acceptable.

According to some industry experts, Treasury is preparing to do a major overhaul of the entire cafeteria plan regulation, and "may look at" health FSAs and HSAs. The official said this will probably begin by Christmas and could take time to finalize. That could slow adoption of the variable flex HSA contributions, but is probably not a big barrier to a group of large employers testing the approach in the near future.